Michigan Car Insurance Guide

Whether you’re a Wolverine or a Spartan fan or live on Lake Michigan or in downtown Detroit, you need auto insurance to drive legally in Michigan. So, consider this your guide to Michigan car insurance laws. We’ll walk through minimum requirements, optional coverages, penalties for driving uninsured, and more!

Personal Auto Insurance

At its core, a personal auto insurance policy is an agreement between you and your chosen insurance company. In this type of contract, you agree to pay a certain amount of money (a premium) in full or in a series of payments, and the insurer agrees to pay for covered damages as outlined in the terms and conditions of the policy.

Michigan Auto Insurance Laws

Michigan’s car insurance laws are a little bit different than most states because Michigan is a no-fault state with no-fault car insurance laws on the books. 

What is no-fault insurance?

There are 12 no-fault states around the country. While their laws might vary slightly or provide exceptions in some places, the general premise is this: After any car accident, each driver’s own insurance company pays for injuries suffered by their insured and his/her passengers as agreed upon in the policy. 

In other words, no-fault insurance requires each driver to take care of themselves and make sure they have the proper coverage, often with personal injury protection (PIP), for injuries resulting from a collision.

Who pays for car damage in a no-fault state?

No-fault insurance only applies to bodily injuries, not property damage. In some no-fault states, you would file a claim with the at-fault driver’s insurance company to recoup vehicle damages through their property damage liability coverage (PD). However, in Michigan, mandatory property damage liability coverage only applies to out-of-state accidents, and property protection insurance (PPI) only applies to fixed objects, not moving vehicles, according to Michigan.gov. So, to ensure your vehicle is protected from accidents regardless of fault in Michigan, you must purchase collision coverage.

Car Insurance Coverages Required in Michigan

In Michigan, all drivers must purchase personal injury protection, property protection insurance, and residual bodily injury (BI)/property damage liability to meet minimum auto insurance requirements.

What is Personal Injury Protection?

Personal injury protection is often referred to as “PIP coverage,” “PIP,” or “no-fault insurance.” While coverage varies depending on where you live, PIP coverage generally helps cover things like:

• Medical bills – After a covered accident, PIP coverage could help you pay for an ambulance ride, diagnostic tests, surgeries, rehab, and more.
• Lost wages – If you’re unable to work following a covered accident, PIP could help replace lost income.
• Funeral expenses – If you, or a covered individual, are involved in a fatal accident, PIP coverage can help pay for funeral costs.
• Service replacement – If you cannot perform typical day-to-day tasks (like working around the house or caring for your kids) due to injuries you suffer in a covered accident, PIP coverage could pay for you to get the help you need.

In Michigan, there are two components to PIP coverage:

• PIP Allowable Expenses Medical (PIP AE Medical) – Pays allowable expenses for your care, recovery, and rehabilitation, including attendant care and some funeral benefits. You may choose a PIP AE Medical limit based on your needs.
• PIP Other Expenses (PIP Other) –Includes wage loss, replacement services, and survivor benefits paid to your dependents if you die in a covered accident. 

Because no-fault states like Michigan require drivers to have coverage for their own bodily injuries following an accident, people can get help with medical expenses quickly. PIP coverage often eliminates the need to assign fault, fight a legal battle, and wait for much-needed money from a settlement.

What is Property Protection Insurance?

Michigan requires every driver to carry property protection insurance as a form of liability coverage. PPI pays up to $1 million for damage you cause to another person’s property with your car. However, this type of coverage only applies to fixed objects, like buildings, signs, mailboxes, or parked vehicles. It doesn’t cover any damages to another moving vehicle.

What Is Bodily Injury Liability Coverage?

In most states, if you cause a car accident that injures someone, your bodily injury liability coverage will pay for their medical bills, not your own.

Because Michigan has no-fault legislation, bodily injury coverage works a little differently in The Wolverine State. With PIP insurance, most accidents will lead to each driver filing a claim for injuries with their own insurer. So why would you need bodily injury liability coverage?

Well, if you cause a crash that leads to severe injuries or death, you can be sued. But if you have bodily injury liability coverage, your insurer will pay up to the limits you selected when you’re found legally responsible for the damage. Your bodily injury coverage can also protect you if you cause an accident while driving outside of Michigan.

What is Property Damage Liability Coverage?

In most states, if you cause an accident that damages someone else’s car, fence, mailbox, or other covered items, your property damage liability coverage will pay to repair or replace it. 

However, in Michigan, PPI coverage accounts for all non-moving objects, as we discussed above. Meanwhile, a Michigan resident’s property damage liability coverage only comes into play if they cause an accident in another state. If you want your car covered in the event of an accident, you need to purchase collision coverage.

Michigan Minimum Insurance Limits

In Michigan, like most other states, you have to meet minimum insurance limits. The limits you purchase for your policy represent the maximum amount of money your insurer will pay after a covered accident. Minimum insurance limits are the lowest dollar amount of a given coverage you can purchase and still be considered street legal. They’re typically written out with three numbers. For example, in Michigan, the minimum limits are 50/100/10.

• $50,000 of bodily injury liability coverage (per person)
• $100,000 of bodily injury liability (per occurrence)
• $10,000 of property damage liability (out of state accidents)

Michigan’s statutory default bodily injury limits are $250,000 (per person) and $500,000 (per occurrence). If you want lower limits, like those listed above, you will be required to fill out a form acknowledging you know the risks that come with choosing lower BI coverage limits.

In addition to these liability coverage options, Michigan residents must carry $1 million in PPI coverage and choose from the following PIP AE Medical Coverage options:

• Option 1 - Unlimited: This is the default coverage option if you don’t select something else. Premiums for unlimited are higher than they are for other coverage options. However, it will help cover costs that might not be covered by health insurance and limits your risk of paying higher amounts of out pocket.
• Option 2 - Limited coverage of $500,000 per person per accident (^{1, 2}): If you choose a $500,000 limit, that is the most your insurer will pay for an injured person’s expenses under PIP coverage.
• Option 3 - Limited coverage of $250,000 per person per accident (^{1, 2}): If you choose a $250,000 limit, that is the most your insurer will pay for an injured person’s expenses under PIP coverage.

If you have qualifying health coverage (QHC), Medicaid, or Medicare, you may be eligible to choose one of the following lower-cost options:

• Option 4 - $250,000 per person per accident with exclusions ^{1, 2} – You can exclude yourself or a family member living with you from PIP coverage with a qualifying health insurance plan. Those who are eligible for this selection will not have to pay a PIP AE premium to their auto insurance company. However, anyone who is excluded will not be eligible to receive PIP AE Medical Benefits. Instead, the medical expenses they incur will be covered by their QHC provider. QHC must be a health or accident policy with a deductible of $6,000 or less per individual that doesn’t exclude or limit coverage for injuries resulting from motor vehicle accidents. Anyone who has QHC or is enrolled in Medicare Parts A and B is eligible. If only some household residents have QHC, you have the flexibility to exclude them. Please note, if you are going to choose this option, you must provide an official letter from your QHC provider stating that your coverage is a sufficient stand-in.
• Option 5 - $50,000 per person per accident ^{1, 2} – This is the lowest level of PIP coverage available to anyone, but it’s only available if the named insured or applicant is a Medicaid enrollee. In addition to this, if the named insured or applicant lives with other people, each resident in the household must be enrolled in Medicaid or Medicare Parts A and B, have QHC, or have their own PIP Allowable Expenses coverage. Documentation proving you/household members meet the criteria may be required.
• Option 6 - Opt Out ² – The named insured or applicant can only opt out if they are a Medicare part A & B enrollee. If the named insured or applicant lives with anyone else, these individuals must also be covered by Medicare Parts A and B, have their own PIP Allowable Expenses coverage, or have other QHC. Documentation proving you/household members meet the criteria may be required.

Penalties for Driving Without Insurance in Michigan

Wondering what happens if you drive without auto insurance in Michigan? Here’s the long list of penalties you face according to Michigan Auto Law.

• A misdemeanor charge
• A fine of $200-$500
• Potential jail time, up to one year
• Driver’s license suspension
• Denied plate renewal
• An inability to sue for pain and suffering or collect money from the at-fault party for vehicle damage

In addition to these penalties, you’ll be paying out of pocket for all of your bills and damages to others. Any medical expenses and lost wages are on you.

Optional Coverages in Michigan

While the minimum car insurance coverage requirements are designed to protect you and others, they don’t cover everything you could encounter on the road. For this reason, many Michigan residents purchase additional coverage options.

Collision Coverage

If you’re involved in a covered car crash, collision coverage will help pay to repair or replace your vehicle, regardless of fault. Even though collision isn’t a state-required coverage, your lender might require you to purchase it if you lease or finance your car. Collision insurance provides protection if:

• You hit (or you’re hit by) another vehicle or motorcycle
• You strike a pole, mailbox, or another stationary object
• Your car flips over
• A hit-and-run driver hits your vehicle

While collision coverage is something residents of every state consider, it might be even more critical in Michigan. If you’re in an accident with another driver who’s at fault, that driver’s PPI would only cover a collision with non-moving objects, and his or her property damage liability coverage would only come into play if they caused the accident out-of-state. Therefore, if you want your car protected in Michigan, collision coverage is almost necessary, even for accidents that aren’t your fault.

Michigan policyholders have three Collision options to choose from based on their needs.

• Standard: Pays for collision damages to an insured vehicle — regardless of who is responsible for the accident. However, this coverage is subject to the applicable deductible amount — regardless of fault percentages.
• Broad Form: Pays for collision damages to an insured vehicle — regardless of who is responsible for the accident. No deductible is applied unless the insured is more than 50% at fault.
• Limited: Pays for collision damages if the insured vehicle’s driver is 50% or less at-fault, and the insured does not have to pay a deductible amount. If the insured vehicle driver is more than 50% at-fault, it will not pay for collision damages. This coverage is recommended only for older vehicles.

How does Michigan’s mini tort law work?

We’ve discussed collision coverage, PPI, and property damage liability as ways to help pay for vehicle damage after a crash. But Michigan also has a mini tort law to help people recover damages from the at-fault driver. It is commonly denoted as Limited Property Damage Liability (LPD or LPDL) coverage. Under this legislation, victims (less than 50% at-fault) can recover up to $3,000. If you’re involved in a crash and are not at fault, you can sue for vehicle expenses not covered by your insurance.

However, car accidents typically cost much more than $3,000, so it’s worth noting that you probably can’t rely on the mini tort law alone for vehicle damage. You should still consider purchasing collision insurance and using the mini tort law to recoup your deductible amount after a crash.

Comprehensive Coverage

Sometimes known as “other than collision coverage,” comprehensive insurance can be your saving grace if your car is damaged outside of a typical car accident. It provides protection if your vehicle is:

• Damaged by weather conditions or natural disasters, like flooding or hail
• Damaged by fallen limbs or objects
• Stolen or vandalized
• Involved in a collision with a deer, bird, or another animal

Comprehensive coverage, much like collision coverage, isn’t required by law but is probably mandatory if you lease or finance a vehicle.

Uninsured & Underinsured Motorist Coverage

If you suffer injuries in a covered accident with an uninsured driver, or if the driver remains unidentified (hit and run), uninsured motorist coverage can help you pay for your medical bills. If an insured driver hits you and doesn’t have enough coverage, underinsured motorist coverage can help you out in Michigan. This coverage isn’t mandatory, but are you wondering whether or not it’s worth purchasing? Michigan has the second-highest percentage of uninsured drivers in the country at 25.5%, according to the Insurance Information Institute. So, it’s worth thinking about if you’re worried a car crash could lead to severe injuries and/or ongoing pain and suffering that costs beyond the limits of your PIP coverage.

Michigan SR-22 Insurance

If you’ve ever heard the term SR-22 insurance, you might be surprised to learn it’s not a type of insurance at all. An SR-22 is a certification your insurer files on your behalf with the state to prove you’re following car insurance coverage laws. You might need an SR-22 on file if you have:

• Been convicted of DUI/DWI
• Had your driver’s license suspended
• Had lapses in your insurance coverage
• Committed serious driving infractions

Michigan Nonstandard Auto Insurance

If any of the following circumstances describe your situation, you could be considered a high-risk driver:

• Had lapses in insurance coverage
• Never had a policy before
• Just got your driver’s license
• Been in one or more at-fault accidents recently
• Recently more than one speeding ticket
• Been recently convicted of DUI/DWI
• Had more than one traffic citation
• Have a below-average insurance score
• Filed multiple insurance claims in recent years
• Own an incredibly valuable vehicle

And if you’re considered a high-risk driver, you might need to search for high-risk (or nonstandard) auto insurance. While not every insurer offers coverage like this to drivers they deem “risky,” some companies, like Direct Auto, specialize in this coverage! These high-risk insurers will work with you to find affordable coverage now and won’t consider you high-risk forever as you work hard to clean up your driving record.

How Much Does Car Insurance Cost in Michigan?

Wondering how much car insurance costs in Michigan? You’re not alone! However, the answer isn’t so simple. Your car insurance premium is a unique number that depends on:

• The types of coverage you choose and the limits you select
• What kind of vehicle you drive
• How much you drive and where you drive
• Your driving record
• Your insurance score history

Generally speaking, Michigan is the most expensive state in the country for car insurance, according to Money Geek. However, recent law changes have helped decrease the cost of auto coverage in recent years, and Direct Auto will work with you to find an affordable policy.

Michigan Assessments

Several organizations assess insurance companies’ operating costs in Michigan. You may notice these costs affect your Statutory Assessment Fees. These organizations include:

• Michigan Auto Insurance Placement Facility (MAIPF) – Provides auto insurance to those unable to obtain insurance coverage in the voluntary market.
• Michigan Catastrophic Claims Assessment (MCCA) – Michigan is the only state that offers unlimited, lifetime Allowable Expense medical coverage under the Personal Injury Protection (PIP) coverage of your auto insurance policy. The MCCA Assessment helps provide ongoing medical care, recovery, and rehabilitation for those catastrophically injured. Every insured driver in Michigan with Unlimited PIP is mandated to pay the MCCA fee, including any deficit recoupments.
• Michigan Catastrophic Claims Assessment Deficiency (MCCAD) – Every driver in Michigan with the $500,000, $250,000, $250,000 with Exclusions, $50,000, or Opt Out is required to pay any deficit recoupments assessed by the MCCA.
• Michigan Assigned Claims Plan Assessment (MACP) – Provides PIP Allowable Expense medical benefits coverage for those who are injured in an automobile accident and do not have their own auto insurance.
• Other Statutory Assessments (STRCP) –
  • Michigan Anti-Theft Prevention Authority (ATPA) Collaboration between law enforcement, communities, and businesses to reduce auto thefts in the state and funded through an annual assessment on personal auto policies.
  • Property & Casualty Guaranty Association (MPCGA) Protects the public against financial losses resulting from insurance company insolvency. The MPCGA provides for the continuation of claims payments.

Motorcycle Insurance in Michigan

Wondering if the insurance requirements for riding a motorcycle are the same as any other automobile? Unlike many other states, Michigan’s insurance laws for motorcycles and cars are quite different! If you’re operating a motorcycle, you don’t have to purchase no-fault coverage. You are required to carry liability coverage of 50/100/10, though.

• $50,000 of bodily injury liability coverage (per person)
• $100,000 of bodily injury liability (per occurrence)
• $10,000 of property damage liability

You can purchase higher limits of coverage, and your insurer is required to offer you medical benefits coverage in $5,000 increments. This coverage protects you if no other insurance coverage is available to pay for injuries after an accident. And while a helmet is always the best option to protect yourself, you must have at least $20,000 of medical benefits coverage to legally ride without a helmet.

How does motorcycle insurance coverage work after an accident in Michigan?

After a crash involving an automobile, a motorcyclist is eligible to receive PIP benefits from the automobile driver’s insurance company. Suppose you’re riding your motorcycle and are involved in a crash with a driver without PIP coverage. In that case, you can receive up to $250,000 in PIP benefits from the Michigan Assigned Claims Plan, a state-created organization to help pay for medical care in the absence of insurance. If you’re in a crash without another vehicle involved, you would need to rely on any medical benefits coverage you purchased or your health insurance policy.

Get More Information

Still have questions about car insurance coverage in Michigan? We’d love to help! Give us a call (1-877-GO-DIRECT) or visit us online for a free quote.

Michigan Insurance Resources

• Michigan’s New Auto Insurance Law
• Michigan Department of Insurance and Financial Services
• Michigan Office of Secretary of State